A divorce is a stressful time for couples. In addition to getting the divorce finalized and determining custody if you have children, you have to determine how you will split your marital assets - from income to property. However, it’s not as simple as dividing assets 50/50. There are obstacles some spouses go through to get their equitable share of the pie, such as overcoming hidden assets and falsified financial documents.
To uncover the information you need for a fair divorce, consider hiring forensic accountants who specializes in family law, making them ideal to assist in settling disputes surrounding marital finances. This type of accountant has a sharp eye and instinct for investigation, delving into financial statements and other financial documents. With help from an accountant during the divorce proceedings, you can secure the assets you need to support you and your family afterward and ensure equitable distribution. A forensic accountant combines the skills and talents of an accountant and a detective to evaluate the income, assets and property of both spouses and help decide on a plan to divide the assets. Not only do professionals in this specialized field of accounting have analytical skills, they also have the knack to communicate their findings and prepare key documents that are presentable in court.
Here are a few ways that a forensic accountant can help during divorce:
Uncover Hidden Assets or Unreported Income
In anticipation of a divorce, one spouse might try to conceal assets - including income, property and retirement savings - from the other. A forensic accountant has the ability to analyze financial statements and look for inconsistencies in these documents that might indicate a spouse is hiding assets. This is usually common when a spouse is considered the bread-winner and brings in most of the couple’s income. A spouse might also have income that is left off of their financial records. Getting the full picture of a spouse’s income is crucial to deciding on alimony or child support payments. Since one spouse might have control of the majority of the finances, they can hide information about the value of their assets and property to prevent the other from accounting for them in the divorce.
When you suspect your spouse is hiding assets from you, you should hire a forensic accountant to comb through their personal bank and investment accounts. A forensic accountant might go through a process called asset tracing, in which they follow the money and determine if one spouse is deliberately concealing assets by transferring them to other people or holding them in an account you didn’t know about.
Free You From the Debt of Your Spouse
Some people are shocked when they learn their spouse has been hiding thousands of dollars of credit card debt or more from them during their marriage and only learn about them in the divorce proceedings. The weight of debt might follow you after the divorce, affecting your ability to obtain new lines of credit in the future or cause your interest rates for other loans and credit to rise. If your spouse is unable to pay, debt collectors might even go after you if you co-signed on a loan. In the event you were unprepared to pay these debts, your own financial standing and credit history might plumit if you have late or overdue payments.
A thorough evaluation of your individual assets and debts are crucial to find potentially unknown debts. A forensic accountant will conduct a forensic financial analysis of your spouse’s personal and bank statements to find concealed debts that could harm your credit worthiness after a divorce. These include defaulted loans that were taken out to finance a business, high balances on credit cards or items in collection, which all have a significant impact on credit scores and will stay on your credit history for several years.
Once a forensic accountant reveals these debts, they can compile these findings in a report that you can present in court. With the hard facts detailed in these reports, you are better prepared if you need to take further legal action against your ex in case he or she tries to pin the debt on you or defaults on his or her loans.
Perform a Lifestyle Analysis
In order to settle a divorce, one spouse might be granted alimony or child support payments. You and your spouse might disagree on how much these payments should be. Hiring a forensic accountant can help settle these disputes by looking at the financial documents that illustrate the standard of living during the marriage. A forensic accountant can perform a lifestyle analysis that will reconstruct income and expenses during the marriage and analyze a spouse’s ability to pay monthly support payments. Evaluating the credit card statements, personal bank accounts and tax returns of both spouse’s can help calculate what the payments might be.
Decide How to Split a Closely Held Business
When you and your spouse were married, you might have decided to open a business together. Since a closely held business is a source of income for both spouses, you will likely need help deciding how to divide a business equally. You might also be awarded a portion of the income of the business in lieu of support payments. For equitable distribution, a forensic accountant will perform a valuation of the business to assess its net worth. An analysis can also determine whether a spouse has been withdrawing cash or misappropriating funds related to the business without your knowledge. After revealing the full value of the business, you and your spouse may decide to sell your business to a third party and split the funds or allow one spouse to retain full ownership.
With the help of a forensic accountant, you will be able to uncover any hidden financial information that will help you and your spouse decide on equitable distribution of your martial assets, allowing you to split from your ex more easily.
